By Max Clarke
Co-op Financial Services has today entered talks with Royal London in order to sell its life insurance subsidiary, along with up to £15bn in assets under their Long Term Business Fund.
The decision, which could see some 670 jobs axed and a further 82 transferred to AXA life insurance, has been poorly received by trades unions. The move follows an on-going strategic review into the Cooperative group in a bid to made the company more efficient.
“We have taken the time needed to consider all our options and find a solution which is ultimately in the best long term interests of our customers and members,” said the Co-op Financial Services CEO, Neville Richardson.
“We understand that such news may be difficult for impacted colleagues and we have not reached this outcome lightly. However, we were faced with rising regulatory costs in a business which was increasingly becoming sub-scale. This move supports our strategy to focus our specific attention on our banking and general insurance areas, where we have a growing and strongly differentiated competitive position.
The strategic review began during the economic downturn and needed to consider the advent of the Retail Distribution Review which proposes significant reforms for the distribution of retail investments. It continued following the merger of Britannia and the Co-operative Bank and considered the subsequent investment of more than £700m being made to increase market presence and capability within the retail and corporate banking markets.
David Fleming, national officer of the unite union commented as follows: “The 750 employees potentially affected by this news will be deeply concerned and upset. Unite has already made clear that the decision to cease to be a provider of life assurance products is a very sad and monumental moment in the history of CFS (formerly known to many as Co-operative Insurance Society) and the whole of the [b]co-operative[b/] movement.”
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